Measures to Promote Startup Investment

The State Council issued a circular on Sept 20 on promoting the sustainable development of startup investment, as an effort to advance mass entrepreneurship and innovation in China.

The circular decided to encourage multiple investors to set up venture capital enterprises or pour money into startups. The investors include investment agencies that have rich resources in entrepreneurship and innovation, such as leading enterprises, business incubators and insurance asset management institutions.

Private investors with capital strength and management expertise are also welcomed to get involved in such investment. In addition, the circular encouraged efforts to set up market-based and specialized funds for startup investment.

It also called for initiatives to expand the group of angel investors, with efforts to promote their information exchanges and cooperation with venture capital enterprises. It also vowed to regulate online equity financing platforms, providing information and technology services for private investors.
The State Council also vowed to expand channels for investment capital, supporting investment agencies, including State-owned enterprises, insurance companies and university funds, to invest in venture capital enterprises or funds.

A long-term and market-oriented cooperation mechanism between venture capital enterprises and varied financial institutions will be established, in a bid to further lower the threshold of startup investment for commercial insurance capital, according to the circular.

Financial institutions are also encouraged to conduct mergers and acquisitions loans for startups.

The State Council aims to strengthen policy support for startup investment, such as conducting tax reduction for venture capital enterprises and mulling over pilot income tax policy for angel investors.

The advantage of government projects will be fully taken in the country’s high-tech and innovation bases, so as to guide venture capital to national science and technology programs.

Policy support, including the issuance of corporate bonds and market withdrawal, will be provided for venture capital enterprises undertaking long-term or value investment.

Meanwhile, the government has decided to optimize the investment environment, with efforts to work out more favorable measures and deepen reforms by streamlining administration, delegating powers, improving regulation and providing better services.

The government will also loosen market access and strengthen supervision over the venture capital industry, and improve information and risk disclosure, setting up an investment assessment mechanism to ensure real, valuable and long-term investment.

No regions or departments are allowed to adopt policies or measures that hinder the market access and development of venture capital enterprises and venture capital management enterprises, according to the circular. (Source: China State Council Website)

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